San Luis Obispo County businesses are on the rebound, slowly moving beyond the painful recession that dealt a tough blow to the local economy.
Some business owners are expanding or revamping their operations; others are hiring again in anticipation of increased business. The worst, they say, appears to be behind them.
“Everybody is starting to see a turnaround,” said Bob Dumouchel, owner of Systems and Marketing Solutions and administrator for a regional roundtable of CEOs. “It’s more positive now. A year ago, it was so negative that it was ridiculous. So, it’s just bouncing back.”
Dumouchel, who leads a monthly meeting of local business leaders, says that a majority of business owners have shifted from cutting costs to supporting growth in a smart and sustainable way. That means growing carefully, not throwing extra overhead onto a business that doesn’t need it and hiring the right employees for the job.
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“They are getting a little bit more aggressive in building their business,” he said.
Rodney Babcock, owner of Next Intent, a San Luis Obispo-based company that manufactures aerospace and spacecraft components, is one business owner who is ramping up again thanks in part to federally funded projects through NASA and the U.S. military.
He has expanded his facility’s square footage by 25 percent and employees by 9 percent with the expectation of a “bit of an upturn,” he said at a recent roundtable meeting. It’s a marked contrast from 2009, when the company was forced to freeze wages to maintain what he called “an even keel.”
“Last year, I was looking over my shoulder every five minutes,’’ he joked. “This year, it’s up to seven or eight.”
Jeremy LaDuque, CEO of Elements, said the interactive Web development firm recently landed a new client, Glass Doctor, which is part of a larger family of companies within the Dwyer Group.
While his company grew only 20 percent last year — down from 80 percent in 2008 — LaDuque is confident new business will lead to greater growth this year.
Although some of his existing clients’ business declined during the recession, he also said they are spending more on Web marketing to generate leads.
“The old saying goes that strong companies grow during a recession,” he said. “So, if you have strong clients, they are spending more with you right now.”
Despite a positive outlook, local business leaders say that fear about the economy persists.
“The worst may be behind us, but that doesn’t mean that all the bad is behind us,” said Brad Kemp, regional economist for Beacon Economics, who will present a mid-year county economic forecast on June 2 in Paso Robles.
The county is in for a slow recovery, Kemp said, and there are several factors in play that present risks for the economy, including the fragile housing market, rising deficits and the potential for inflation. Job growth, too, will be slow. While Kemp predicts continued job gains this year, the unemployment rate in the county has reached record levels and was 10.6 percent in March (the latest month for which statistics were available), according to the federal Bureau of Labor Statistics.
“If you look at the idea of a jobless recovery, there will not be extreme spending,” he said. “The question is, what’s the new consumer spending look like? What’s the new ‘new?’ ”
Even so, Kemp said local business leaders have a reason to feel good about this year.
“If businesses have made it thus far and given that they’re at the bottom of operating expenses, surviving on the lowest cash flow, any increase in revenue stream is a positive event.”
However, the uncertainty continues for many in the business community, including clients of Caliber Accounting Group.
“We’re seeing things all over the board,’’ said Gary Jensen, one of the partners at the San Luis Obispo firm. “We deal with a lot of small businesses, and a few of our clients have had the best year they’ve had. More of our clients have entered into hunker-down-and-survive mode.”
In addition to declines in operating profits, a few of the key issues for businesses have been a deterioration of collateral and difficulty securing financing from community banks, he said.
After several years of contracting, some business owners say they are looking forward to turning the corner.
Sandy Lubin, president and CEO of the Credit Bureau of San Luis Obispo and Santa Barbara Counties, said he expects business to improve substantially next year.
The bureau reduced management staff in the last couple of months, but it also has seen an increase in new clients over the past six months.
“They’re finally getting the picture that they have to get receivables collected, they can’t just sit on them anymore,’’ he said.
The bureau is also expanding into the Sacramento area.
“We’re doing it at the best time ... at the bottom,” Lubin said. “Little companies (in the mortgage reporting industry) can’t survive any more. They’re trying to find a way to stay in business. But we can walk in and take over with very little out-of-pocket expense.”
For the last year, Naomi Neilson-Howard, owner of Native Trails, a manufacturer of kitchen and bath products, said her company has emphasized increasing efficiency, reducing costs, improving customer service and working with kitchen and bath dealers that have had a rough time getting through the year. She also has a renewed focus on marketing and branding, revamping all of the company’s literature to let people know “we’re still around.”
The company has launched new products and decided to hire additional employees, who she has found to be more qualified than in the past.
“One thing that has been important to remember is that no matter what’s going on in the economy, you need to focus on what you do best and continue to do best,” Neilson-Howard said.
Dumouchel, leader of the CEO group, said that type of can-do attitude has served the business leaders he’s affiliated with well. He’s not aware of any of the roundtable participants closing up shop during the recession.
“It’s almost impossible to run a business as a pessimist,” he said. “You have to be upbeat. Otherwise, the whole organization would feed on the negativity and collapse on itself.”